We propose to continue a bi-directional research program that starts with careful characterization of visual processing deficits in schizophrenia and moves systematically into exploration of neural substrates on the one hand and functional outcome on the other. Our research program rests on the premise that considerable information about schizophrenia can be obtained by a close examination of a well- characterized neurocognitive deficit, in the case of this research program, it is early visual processing. The current application takes this program of research in three new directions: First, we plan to assess separately feed forward and reentrant processes of visual processing. Feed forward processes involve the flow of information from retina to and through visual cortex. Reentrant processes, which have become a focus in cognitive science, involve iterative feedforward-feedback processing loops within the cortex. We will examine these processes with performance, electrophysiological, and functional neuroimaging approaches. Second, we will move beyond the earliest components of visual processing that are assessed with visual masking tasks to consider visual short-term memory. Our masking procedures have typically assessed the first 150 ms of visual processing, whereas visual short-term memory represents the first 200 - 500 ms of processing. We will assess this component with versions of the attentional blink task that can be administered during EEC recordings and in the fMRI scanner. Third, we will apply structural equation modeling to explore further the paths between early visual processing and functional outcome in schizophrenia. Our previous studies have reported consistent relationships between early visual processing and social cognition, and between social cognition and functional outcome. Structural equation modeling which is very well suited for these questions, but requires large sample sizes. To accomplish these goals, we plan to recruit 200 patients with schizophrenia and 60 healthy comparison subjects over the 5 years of the project. Subjects will receive interviews, assessments of visual processing (visual masking and attentional blink), and electrophysiology (EEC during visual processing tasks). A subset of participants will receive visual processing tasks in the fMRI scanner. Knowledge from this research program will lead to information on the underlying neural substrates of visual processing in schizophrenia and may lead to innovative treatments, as well as alternative ways of developing and testing new treatments. Knowledge of the relationships between perceptual deficits and daily activities and the mechanisms for these relationships will help us to understand limitations on functional outcome in schizophrenia, help make predictions about outcome, and lead to design of targeted interventions.